Key Takeaways

• If you’re a Postal Service retiree or about to retire, understanding how Medicare works alongside the new Postal Service Health Benefits (PSHB) Program is essential to avoid losing coverage or paying more than necessary.

• While Medicare enrollment isn’t mandatory for all, failing to sign up when required could result in reduced benefits or coverage gaps under PSHB starting in 2025.

What Changed in 2025 with PSHB

Starting January 1, 2025, the Postal Service Health Benefits (PSHB) Program replaced the Federal Employees Health Benefits (FEHB) Program for USPS employees, retirees, and eligible family members. This shift is part of the Postal Service Reform Act of 2022, and it’s not just a name change—it directly impacts how your health benefits work with Medicare.

Here’s what’s different:

• PSHB plans are exclusively for USPS workers and retirees.

• Medicare Part B enrollment is now required for certain annuitants and family members to maintain PSHB coverage.

• The integration with Medicare Part D prescription drug plans is automatic for Medicare-eligible enrollees.

Understanding these changes can help you make the right decision when it comes to your Medicare enrollment.

Who Must Enroll in Medicare Part B

You are required to enroll in Medicare Part B to remain eligible for full PSHB benefits if you meet both of the following conditions:

• You are a Postal Service annuitant or family member.

• You are entitled to Medicare Part A (typically at age 65 or through disability) as of January 1, 2025 or later.

Exemptions to the Rule

There are specific exemptions to the Medicare Part B requirement:

• You retired on or before January 1, 2025.

• You were age 64 or older as of January 1, 2025.

• You reside outside the U.S. or its territories.

• You are covered by VA or Indian Health Service benefits.

If you fall under any of these, you can keep your PSHB coverage without Medicare Part B. Otherwise, failing to enroll could lead to loss of certain PSHB benefits or even coverage.

What Happens If You Don’t Enroll in Medicare Part B

If you are required to enroll and don’t, here’s what you risk:

• You may lose your eligibility for certain PSHB plans.

• You could face higher out-of-pocket costs for services Medicare would otherwise cover.

• Some PSHB plans may reduce or deny payment for services if you aren’t enrolled in Medicare Part B.

In short, not enrolling could leave you paying more and receiving less.

Why Medicare Still Matters with PSHB

Some retirees assume they no longer need Medicare because PSHB provides solid coverage. But PSHB is designed to work with Medicare, not replace it.

When you have both:

• Medicare becomes your primary payer.

• PSHB becomes your secondary payer, covering costs Medicare doesn’t.

This coordination can save you money on deductibles, copays, and coinsurance, particularly for hospital stays and specialist visits.

In 2025, Medicare Part B has a monthly premium of $185 and an annual deductible of $257. PSHB plans often waive or reduce cost-sharing when Medicare is your primary insurance, which offsets some of those costs.

Understanding PSHB and Medicare Drug Coverage

PSHB plans automatically include Medicare Part D prescription drug coverage for Medicare-eligible members through an Employer Group Waiver Plan (EGWP). You don’t have to enroll separately.

What this includes:

• A $2,000 cap on out-of-pocket drug costs in 2025.

• A $35 monthly insulin cap.

• Access to an expanded pharmacy network.

If you opt out of this integrated Part D coverage, you may lose your entire prescription drug benefit under PSHB.

How Coordination of Benefits Works

When you’re enrolled in both Medicare and PSHB:

• Medicare pays first.

• PSHB pays second.

This can significantly reduce your personal costs. For example:

• Medicare may pay 80% of an outpatient service.

• Your PSHB plan may cover most of the remaining 20%.

Without Medicare Part B, PSHB would be your only payer, and you’d pay more out of pocket.

Enrollment Periods and Timing

If you turned 65 before 2025 and didn’t enroll in Medicare Part B, you may qualify for a Special Enrollment Period (SEP) under PSHB rules.

• The SEP for PSHB ran from April 1 through September 30, 2024.

• If you didn’t enroll during the SEP, you may now face late enrollment penalties and coverage limitations.

If you’re turning 65 in 2025 or later:

• Your Initial Enrollment Period (IEP) starts 3 months before your 65th birthday and continues for 7 months.

• Enroll on time to avoid penalties and ensure uninterrupted PSHB coverage.

How to Check If You’re Affected

You can determine your status by asking these questions:

• Are you a USPS annuitant or eligible family member?

• Will you be entitled to Medicare Part A on or after January 1, 2025?

• Do you plan to continue your PSHB coverage?

If the answer is yes to all three, then enrolling in Medicare Part B is not optional—it’s necessary.

If you’re not sure, you can check with:

• The PSHB Navigator Help Line (1-833-712-7742)

• Your personal retirement or benefits advisor

What About FEHB and Other Federal Programs?

If you’re a Postal retiree enrolled in a family member’s FEHB plan who isn’t a USPS employee, you’re not required to switch to PSHB. You can continue FEHB coverage if you’re not the primary USPS enrollee.

Also, other benefits like:

• FEDVIP (dental and vision)

• FEGLI (life insurance)

• FLTCIP (long-term care)

• FSAFEDS (flexible spending accounts)

remain unchanged and are not impacted by PSHB or Medicare enrollment.

Don’t Delay: Planning Ahead Is Crucial

In 2025 and beyond, you’ll need to be more proactive with your Medicare decisions. Postal retirees who ignore the PSHB-Medicare integration risk:

• Coverage loss

• Higher medical expenses

• Long wait times for new coverage

It’s not just about checking a box—it’s about ensuring you’re fully covered in retirement.

Here’s how to prepare:

• Review your eligibility and exemptions.

• Track your enrollment periods.

• Understand how PSHB and Medicare work together.

• Compare expected out-of-pocket costs with and without Medicare.

If you’re not confident about your situation, professional help can be a smart move.

Making the Right Choice for Your Retirement Health

The PSHB program isn’t designed to replace Medicare—it’s meant to complement it. If you’re a USPS retiree who falls under the required group, enrolling in Medicare Part B ensures you keep your benefits and potentially lower your costs.

If you qualify for an exemption, you still have a choice—but you’ll want to weigh the long-term savings of enrolling in Medicare anyway.

It all comes down to understanding the rules and timelines. Medicare and PSHB don’t operate in isolation—they’re now closely connected. Getting this wrong could affect your retirement security, but getting it right can mean reliable, affordable care for years to come.

For professional advice based on your personal situation, speak with a licensed agent listed on this website.